On January 2, 20X8, Johnson Company Acquired a 100% Interest

question 52

Multiple Choice

On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of Perth Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet contained the following information: Perth's income statement for 20X8 is as follows:
The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8.
Refer to the above information. Assuming Perth's local currency is the functional currency, what is the balance in Johnson's investment in foreign subsidiary account at December 31, 2008?

• A) $3,216,500
• B) $3,560,000
• C) $3,568,300
• D) $3,577,694

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Definitions:

Frequent Purchase

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Personal Use

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Antecedent State

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